Automatic Offset in Oracle Payables

When an AP invoice is entered, there may be multiple expense/ distribution accounts and the corresponding liability account generally booked is the default account picked from the Supplier site or the one defaulted at Invoice header level. However, there may be scenarios where a business entity is using the same Operating Unit to make purchases against multiple balancing segments. In such cases, it would be imperative to have different liability accounts booked against each of the different distribution accounts.

For example, consider an AP Invoice with a default liability account and two different distribution accounts.

Liability is an offset account. We can offset liabilities in three ways i.e

• None
• Balance
• Account

If you enable Automatic Offsets, Payables automatically balances invoice and payment distributions that cross balancing segments by creating offsetting entries for each balancing segment. Automatic Offsets is a powerful feature that greatly affects processing throughout Payables

Liability account set at Supplier site is: -

None: If the Automatic Offset method is "None" then while offsetting the liability account for the invoices which are distributed with multiple BSVs , it will use the liability account mapped at Supplier Site and automatically generates Intercompany Accounts to balance the journal.

It will generate Intercompany accounts provided when we enable Intercompany accounts at the GL otherwise it will fail to generate accounting.

 

Example for None

                                                                           Debit                    Credit

               01.01.00.00.1530                            5000

               02.11.00.00.1530                            5000

               01.00.00.00.2210                                                          10000

               01.00.00.00.1810(IC Rec)             5000

               02.00.00.00.2370(IC Pay)                                            5000

 

Balance: In Balance method when offsetting the liability account Balancing Segment is derived from the same entry and remaining all the segments are going to come from Supplier Site.

 

Example for  Balance

                                                                           Debit                    Credit

               01.01.00.00.1530                            5000

               02.11.00.00.1530                            5000

               01.00.00.00.2210                                                          5000

               02.00.00.00.2210                                                          5000

Account: In Account method all the segments are going to come from same entry and Natural Account segment is going to come from Supplier Site.

 Example for  Account

                                                                           Debit                    Credit

               01.01.00.00.1530                            5000

               02.11.00.00.1530                            5000

               01.01.00.00.2210                                                          5000

               02.11.00.00.2210                                                          5000

Enable Automatic Offset Method at the Payables Option

N: AP -> Setup -> Options -> Payables Options -> Operating Unit: Select OU

Accounting Option -> Automatic Offset Method: None

Create an invoice and validate and then run create accounting to see the impact.

 Similarly change the Automatic offset method to Balance and Account and create invoices and run accounting to see the impact.

P2P Journal Entries in Fusion

1. Purchase Requisition no JE
2. Request for Quotation no JE
3. We prepare a Purchase Order against best RFQ no JE
4. Goods Receipt(You receive the goods enter a Goods Received Note (GRN) in Oracle Purchasing)
               Receiving Inventory A/c…………….Debit (Picks from Receipt Accounting options)
               AP Accrual A/C………Credit (Picks from Accrual Account of PO-TAB/TAD)
5. When we are moving the Goods from Staging area to Sub-Inv or Delivery happens/ Put Away
               Material A/C..............Debit (Picks from Charge Account of PO-TAB/Cost Accounting Options)
               Receiving Inventory A/C......Credit (Picks from Receipt Accounting options)
6. While Creating the Invoice
               AP Accrual A/c………….Debit (Picks from Accrual Account of PO-TAB/TAD)
               Liability(Supplier) A/c…………..Credit (Picks from Supplier Site/Common Options)
7. While making payment to supplier
               Liability(Supplier) A/C…………… Debit (Picks from Supplier Site/Common Options)
               Cash Clearing A/c…………….Credit (Picks from Bank Setup)
8.When reconciling
               Cash Clearing A/C...................Debit (Picks from Bank Setup)
               Cash A/C..........................................Credit (Picks from Bank Setup)